Profit at high street unit TSB Bank soared in the third quarter as the lender readied the ground for its blockbuster takeover by Santander.
The bank’s pre-tax profit hit £271m for the first nine months of the year – a 38.2 per cent jump from the same period in 2024.
It came as the bank drastically slashed costs, falling 7.5 per cent to £581.7m.
The firm’s cost-to-income ratio fell to 65.7 per cent, down from 73.2 per cent, meaning the firm was spending less on costs for each £1 of income earned.
The bank’s net interest margin – a key metric of its profitability from lending – swelled 21 basis points to 2.86 per cent.
Spanish banking giant Banco Sabadell, which acquired TSB for £1.7bn from Lloyds Banking Group in 2015, put the lender up for sale earlier this year attracting the attention of the UK’s banking giants.
TSB snapped up by Santander
Santander was able to beat the crowd in a deal that is expected to amount to £2.9bn.
TSB will add five million customers, £34bn in mortgages and £35bn in deposits to Santander’s portfolio, as well as its 218 branches.
The combined entity will serve 28 million customers and rank second in personal current account branches.
The deal is expected to formally close in the first quarter of 2026.
The £2.9 figure represents an eventual final price the lender’s expect the deal to rise to once estimated profits are factored in. Shareholders will be asked to approve a £2.65bn deal.
The purchase gave tangible backing to Santander boss Ana Bostin’s claims the bank was not retreating from the UK market.
Botin said: “The acquisition of TSB represents a continuing strategic commitment to our customers in the UK, offering a compelling opportunity that is financially attractive to our shareholders and aligned with Santander’s long-term objectives.
“It strengthens our franchise in a core market through the acquisition of a low-risk and complementary business that adds to our diversification.”